Estate Planning, Not Just for the Wealthy

You still need a Will, even if you're not rich. Especially if you have children. Don't be intimidated! It's easier than you think!

Many people believe that you need to have a lot of wealth, or be a certain age, to begin estate planning.  It’s just not true.  If you own ANYTHING, you need an estate plan!  It doesn’t matter the value of what you own, or how old you are.  The value of your estate (all the stuff you own) is what determines how elaborate your plan should be.

I am not an attorney and this blog, nor any post, is intended to be legal advice.  This post may contain affiliate links.  If you click through my links, I may be compensated.  Please see Disclosure page for additional information. 

What is an Estate Plan?

An estate plan spells out, in writing, your wishes for managing your affairs upon incapacity, disability, or death.  Without the appropriate documents in place, it may be left up to the courts to determine what happens in the event you become unable to handle your affairs yourself.

Documents Needed for a Solid Estate Plan

  • Medical Directives (Living Will, Do Not Resuscitate)
  • Medical Power of Attorney
  • Durable General Power of Attorney
  • Will (Last Will & Testament)
  • Trust

What is a Medical Directive?  An advance medical directive is a legal document that expresses your wishes for healthcare in the event you are unable to make decisions for yourself.

What is a Medical Power of Attorney?  A medical power of attorney is a legal document in which you give the authority to another person to act on your behalf for medical reasons only.  So, the medical directive is the set of rules, and the medical POA is the person designated to carry out those wishes.

What is a Durable General Power of Attorney?  A durable general power of attorney is a legal document in which you designate an agent to handle your affairs in the event you are unable to do so.  This document is usually very broad, authorizing the agent to do just about anything that you would otherwise normally do for yourself, i.e., bank accounts, insurance, real estate, investments, and more.  This is why you must really trust a person to name him/her your agent!  You’re giving them a lot of power!

What is a Will?  Also known as a Last Will & Testament (do not confuse with Living Will, which is for medical, see above).  A will is a written set of rules, to be carried out by your designated executor, upon your death.  This document spells out exactly how your assets are distributed and to whom.  Wills must be admitted to probate (a court process of “proving the will”) before assets can be distributed.  You can also declare a guardian for your minor children in your will.

You probably have heard of a “holographic will”, or a Will that is handwritten.  Yes, you can do that (rules vary by state).  But I don’t recommend it.  However, if you’re in a situation where you MUST have a will prepared right away, DIY is better than nothing.

What is a Trust?  A trust is a legal document which essentially creates a separate entity to hold ownership of your assets.  If your assets are owned in the name of your trust at the time of your death, these assets will avoid the probate process (probate is for the will, not the trust).  It is not a substitute for a will because many people forget to title some assets in the name of their trust.  A trust is funded in your lifetime and you can retain the ultimate control over it.  If you become disabled or incapacitated, a successor trustee can easily continue to manage your affairs as you always have.  The trust may terminate upon your death, or your assets my remain in the trust for the benefit of your heirs.  A trust is the ultimate estate planning tool!

How To Set Up Your Plan

I’ve mentioned in other posts, that my day-job is in the wealth management field.  My specialty area is trust and estate management.  I have personally settled well over 100 estates in my career.  Please take it from me.  Don’t do it yourself if you don’t have to.  The results can be financially devastating to your family.  Hire an attorney who specializes in estate planning.  Usually attorneys will give you a “package-deal”.  All of the necessary estate planning documents (see list above) for a flat rate.

How Much Does It Cost?

In my experience, the rates range from around $500 (for a basic Will) to about $3,500 (for all documents).  If you have a large estate, or want to set up charitable foundations, or other fancy planning vehicles, then the cost of your plan could be much more.  On average, I usually see the package deal for about $2,500.  This is definitely one of those things where “you get what you pay for”.

If you’re on a tight budget, then at a minimum, have a basic Will prepared (usually around $500).  Especially if you have small children.  You’ll want to designate a guardian for your minor child in the even of your untimely death.

Do you have an estate plan in place?  If not, perhaps it’s time to start thinking about it–it’s not too late!

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